Simply put, a blockchain is a type of distributed ledger or decentralized database that keeps continuously updated digital records of who owns what. Rather than having a central administrator like a traditional database such as utilized by banks, governments, accountants, etc., or in one location in the cloud, a distributed ledger has a network of replicated databases, synchronized (often via the internet) and visible to anyone within the network. Blockchain networks can be private with restricted membership similar to an intranet, or they can utilize public internets such as the World Wide Web which can be accessed by any person in the world. When a digital transaction is carried out, it is grouped together in a cryptographically protected block with other transactions that have occurred in a segment of time (normally the last 10 minutes) and sent out to the entire network. Miners (members in the network with high levels of computing power) then compete to validate the transactions by solving complex coded problems. The first miner to solve the problems and validate the block receives a reward. (In the Bitcoin Blockchain network, for example, a miner would receive Bitcoins). Cryptocurrency and associated mining is what has led to popularizing the use of blockchain.
The validated block of transactions is then timestamped and added to a chain in a linear, chronological order. New blocks of validated transactions are linked to older blocks, making a chain of blocks that show every transaction made in the history of that blockchain. The entire chain is continuously updated so that every ledger in the network is the same, giving each member the ability to prove who owns what at any given time or any given instance.
According to Vitalik Buterin, the co-creator and inventor of Ethereum (another cryptocurrency) described as a “decentralized mining network and software development platform rolled into one” that facilitates the creation of new cryptocurrencies and programs that share a single blockchain (a cryptographic transaction ledger).
“A blockchain is a magic computer that anyone can upload programs to and leave the programs to self-execute, where the current and all previous states of every program are always publicly visible, and which carries a very strong crypto economically secured guarantee that programs running on the chain will continue to execute in exactly the way that the blockchain protocol specifies.”
Blockchain's decentralized, open and cryptographic nature allow people to trust each other and transact peer to peer, making the need for intermediaries obsolete. This also brings unprecedented security benefits. Hacking attacks that commonly impact large centralized intermediaries like banks would be virtually impossible to pull off on the blockchain. For example, if someone wanted to hack into a particular block in a blockchain, a hacker would not only need to hack into that specific block, but all of the proceeding blocks going back toward and including the entire history of that blockchain. The hacker/perpetrator would also need to carry out this procedure for every ledger in the network, which could include millions, and simultaneously.
Blockchain is a highly disruptive technology that promises to change the technology world as we know it today (2018). The technology is not only shifting the way we use the Internet, but it is also revolutionizing the global economy. By enabling the digitization of assets, blockchain is driving a fundamental shift from the Internet of information, where we can instantly view, exchange and communicate information to the Internet of value, where we can instantly exchange assets. A new global economy of immediate value transfer is on its way, where big intermediaries may no longer play a major role. An economy where trust is established not by central intermediaries but through consensus and complex computer code.
According to Don Tapscott, who is a Canadian business executive, author, consultant and speaker, and who specializes in business strategy, organizational transformation and the role of technology in business and society. He is the CEO of The Tapscott Group, and was founder and chairman of the international think tank New Paradigm before its acquisition, “The technology likely to have the greatest impact on the next few decades has arrived. And it's not social media. It's not big data. It's not robotics. It's not even AI. You'll be surprised to learn that it's the underlying technology of digital currencies like Bitcoin. It's called the blockchain.”
Blockchain has applications that go way beyond obvious things like digital currencies and money transfers. From electronic voting, smart contracts and digitally recorded property assets to patient health records management and proof of ownership for digital content.
Blockchain will profoundly disrupt hundreds of industries that rely on intermediaries, including banking, finance, academia, real estate, insurance, legal, health care and the public sector-amongst many others. This will result in job losses and the complete transformation of entire industries. But overall, the elimination of intermediaries brings mostly positive benefits. Banks and governments for example, often impede the free flow of business because of the time it takes to process transactions and regulatory requirements. The blockchain will enable an increased amount of people and businesses to trade much more frequently and efficiently, significantly boosting local and international trade. Blockchain technology would also eliminate expensive intermediary fees that have become a burden on individuals and businesses, especially in the remittances space.
Brock Pierce, who in 2013 founded venture capital firm Blockchain Capital (BCC) which was reported to have raised $85 million in two venture funds by October 2017 and announced a $50 million Initial Coin Offering (ICO) by BCC in February 2017 known as EOS and marketed through a new vehicle called Block.one that is developing “end-to-end solutions to bring businesses onto the blockchain from strategic planning to product deployment”, stated that “Every human being on the planet with a phone, will have equal access (to a form of blockchain). This expands the total addressable market by 4×”
In other words, perhaps most profoundly, blockchain promises to democratize and expand the global financial system. Giving people who have limited exposure to the global economy, better access to financial and payment systems and stronger protection against corruption and exploitation is certainly one advantage that will make this technology more ubiquitous. The potential impacts of blockchain technology on society and the global economy are incredibly significant. With an ever-growing list of real-world uses, blockchain technology promises to have a massive impact.
Briefly summarizing, the blockchain works as a tamper-proof distributed public ledger that manages transactions. Another way to think of this is that blockchain is like a magical Google spreadsheet in the cloud, or more specifically on a network. Put simply, a blockchain is basically an incorruptible distributed ledger of data, which can be used to store informational assets ranging from managing cryptographic contracts to transferring value. The most recognized application on a blockchain are bitcoin transactions. The transferring of value from one person to another with no central intermediary, and without allowing a person or party to spend their bitcoin (or other cryptocurrency) twice “the double spend rule”. This means that “value” can have a change of title and ownership from one person/party to another, without the need of a trusted third party to validate/govern the trade.
To accomplish this, the need for governance is found in the protocol. Besides being a ledger for “data of value”, or cryptocurrencies, blockchain technology is finding broader usage in peer to peer lending, (smart) contracts managements, healthcare data, stock transfers, and even elections. Like any emerging and disruptive technology, no one can predict the future of blockchain technology, but it is clear that it isn't (just) for purchasing black-market goods and services. In fact, blockchain technology is finding its way into big firms such as IBM, Microsoft, and major banking institutions. Interest in the technology is driven by (fear of disruption) the fact that it excludes trusted third parties (banks and clearinghouses) during transfer of values, which in turn results in fast, private and less expensive financial transactions.
As stated above, blockchain can facilitate the peer-to-peer transfer of anything that's of value. This may range from assets, properties, and contracts. The most crucial and far-reaching Blockchain applications is applied in Bitcoin, with transfer of value, and for Ethereum, with its enhancement of smart contracts.
As low-trust digital-based systems gain adherents and differing use cases, software developers are creating new variant blockchains to deal with the inevitable fragmentation between public, consortium and private blockchain technologies.
Here, it is important to understand the differences between public, consortium and private blockchains.
Public—
Fully decentralized and uncontrolled networks with no access permission required-anyone can participate in the consensus process to determine which transaction blocks are added. There is usually little or no pre-existing trust between participants in a Public blockchain.
Consortium—
The consensus process for new transaction blocks is controlled by a fixed set of nodes, such as a group of financial institutions where pre-existing trust is high.
Private—
Access permissions are tightly controlled, with rights to read or modify the blockchain restricted to certain users. Permissions to read the blockchain may be restricted or public.
There is usually some degree of pre-existing trust between at least some of Private blockchain participants. The degree of pre-existing trust that an organization requires, as well as necessary control over participant permissions, will determine what type of blockchain to use. Different blockchain solutions have advantages and disadvantages. Take for example, the difference between how transactions are validated within each type of blockchain:
Proof of Work (PoW):
About “mining” transactions utilizing a resource-intensive hashing process, which (a) confirms transactions between network participants and (b) writes the confirmed transactions into the blockchain ledger as a new block.
The accepted new block is proof that the work was done, so the miner may receive a 25 BTC (Bitcoins) payment for successfully completing the work. The problem with PoW is that it is resource-intensive and creates a centralizing tendency among miners based on computer resource capability.
Proof of Stake (PoS):
About “validating” blocks created by miners and requires users to prove ownership of their “stake. Validation introduces a randomness into the process, making the establishment of a validation monopoly more difficult, thereby enhancing network security.
One problem with PoS is the “nothing at stake” issue, where miners have nothing to lose in voting for different blockchain histories, preventing a consensus from being created. There are several attempts to solve this problem underway. Additional developments in this area hope to combine PoW with PoS to create hybrid blockchains with the highest security and lowest resource requirements. To that end, some developers are focused on enhancing network security through ‘consensus without mining.’
Blockchains fundamentally operate on the basis of how consensus is agreed upon for each transaction added to the ledger.
To address the benefits of each type of consensus mechanism and in which situation are they best utilized, the following additional terms have been defined.
Delegated Proof of Stake—
Network parameters are decided upon by elected delegates or representatives. If you value a “democratized” blockchain with reduced regulatory interference, this version is for you.
PAXOS—
An academic and complicated protocol centered around multiple distributed machines reaching agreement on a single value. This protocol has been difficult to implement in real-world conditions.
RAFT—
Similar to PAXOS in performance and fault tolerance except that it is “decomposed into relatively independent subproblems”, making it easier to understand and utilize.
Round Robin—
Utilizing a randomized approach, the round robin protocol requires each block to be digitally signed by the block-adder, which may be a defined set of participants. This is more suited to a private blockchain network where participants are known to each other.
Federated Consensus—
Federated consensus is where each participant knows all of the other participants, and where small sets of parties who trust each other agree on each transaction and over time the transaction is deemed valid. Suitable for systems where decentralized control is not an imperative.
Proprietary Distributed Ledger—
A PDL is one where the ledger is controlled, or proprietary, to one central entity or consortium. The benefits of this protocol are that there is already a high degree of pre-existing trust between the network participants and agreed-upon security measures. Suitable for a consortium or group of trading partners, such as supply chains.
PBFT—
In a PBFT system, each node publishes a public key and messages are signed by each node, and after enough identical responses the transaction is deemed valid. PBFT is better suited for digital assets which require low latency due to high transaction volume but do not need large throughput.
N2N—
Node to node (N2N) systems are characterized by encrypted transactions where only the parties involved in a transaction have access to the data. Third parties such as regulators may have opt-in privileges. Suitable for use cases where a high degree of transaction confidentiality is required.
The above list represents the current major consensus mechanisms in operation or from research organizations.
Due to the initial visibility of Bitcoin, the financial services industry has been early in researching the possible uses of consensus mechanisms to streamline operations, reduce costs and eliminate fraudulent activity.
The multi-trillion dollar global financial services industry is really composed of many different sectors, from lending to smart contracts, trading execution, letters of credit, insurance, payments, asset registration, regulatory reporting and more.
For example, the process of securing a letter of credit, which is an important import/export trading service, would likely utilize a ‘consortium’ approach to achieving transaction consensus.
In August, 2016 a banking consortium, R3CEV, successfully designed and executed trading smart contracts. These types of contracts could then be applicable to accounts receivable invoice factoring and letter of credit transactions.
For the use case example of cross border remittances, which would involve many individuals on both sides of the transaction, a ‘public’ consensus mechanism would likely be a relevant choice. Since remittances would need to have a relatively short time latency for transaction completion, a solution involving a Proof of Stake approach with its low resource requirement to validate transactions along with potentially higher security, would be compelling.
In sum, the state of blockchain development is rapidly gaining speed worldwide, yet there is much work to be done.
Numerous Global 2000 companies led by their technology executives and consultants are beginning to participate in development and testing of this revolutionary technology sector.
Organizations that begin first-hand learning about the power of blockchain technologies will have increased opportunity to lead their industry.
Existing Proof of Work and Proof of Stake protocols have various problems, such as requiring huge outlays of energy usage and increasing centralization (PoW) or participants having nothing at stake (PoS) possibly contributing to consensus disruption on mined blocks.
Tendermint co-founder Jae Kwon has published a paper describing his firm's concept and approach in this regard. Kwon's solution is twofold and does not require Proof of Work mining:
(a) A ⅔ majority of validators is required to sign off on block submission, with no more than ⅓ able to sign duplicate blocks without penalty
(b) The protocol raises the penalty of double-spend attacks to unacceptably high levels by destroying the malicious actor's Bitcoin account values.
The algorithm is “based on a modified version of the DLS protocol and is resilient up to ⅓ of Byzantine participants.”
Kwon and his team at Tendermint hope to bring speed, simplicity and security to blockchain app development.
An important and difficult to answer question remains. How does one decide on what type of blockchain to use and their relevancy for your company use case? The FIG. 1 provides a pathway for initial success, by determining the need for blockchain.
Below are a few examples of different types of blockchains, depending on the organization's greatest prioritized need and a table which organizes these needs follows.
One consideration is confidentiality. For example, in the case of a public financial blockchain, all the transactions appear on the ledgers of each participant. So, while the identities of the transacting parties are not known, the transactions themselves are public.
Some companies are developing ‘supporting’ blockchains to avoid this problem, by “storing or notarizing the contracts in encrypted form, and performing some basic duplicate detection.” Each company would store the transaction data in their own database, but use the blockchain for limited memorialization purposes.
A second consideration is whether you need provenance tracking. Existing supply chains are rife with counterfeit and theft problems. A blockchain that collectively belongs to the supply chain participants can reduce or eliminate breaks in the chain as well as secure the integrity of the database tracking the supply chain.
A third example is the need for recordkeeping between organizations, such as legal or accounting communications. A blockchain that timestamps and provides proof of origin for information submitted to a case archive would provide a way for multiple organizations to jointly manage the archive while keeping it secure from individual attempts to corrupt it.
TABLE 1Consensus for the Utilization of BlockchainAssertionAnswerNetworkA significant number of participants will Agree/Yes □be transacting on the network (>100)You don't trust the participants in theAgree/Yes □network and don't need/want to know themPerform-A limited amount of data needs to be stored Agree/Yes □ancefor every transaction (a few fields)The business process doesn't require a high Agree/Yes □throughput (scalability)BusinessThe business logic is simpleAgree/Yes □LogicPrivacy of transactions is not an important Agree/Yes □featureThe system will be standalone, it doesn't Agree/Yes □need to access external data or be integrated in the IT legacyCon-No arbitrator shall be involved in case of Agree/Yes □sensusdisputeAll participants can be involved in the valida- Agree/Yes □tion of transactions (Vs only a group of known validators)You need strict immutability of the record Agree/Yes □(no amend & cancel, even by admin)
Blockchains fundamentally operate on the basis of how consensus is agreed upon for each transaction added to the ledger.
Understanding the differences between Private, Public and Consortium Blockchains is important.
As financial institutions begin to explore the possibilities of blockchain technology, they are coming up with systems that complement their existing business models. A private or a consortium blockchain platform, as opposed to the public platform that Bitcoin uses, will allow them to retain control and privacy while still cutting down their costs and transaction speeds.
In fact, this private system will have lower costs and faster speeds than a public blockchain platform can offer. Blockchain purists aren't impressed. A private platform effectively kills their favorite part of this nascent technology: decentralization. They see the advent of private blockchain systems as little more than a sneaky attempt by big banks to retain their control of financial markets.
The purists have a point, though the evil plot narrative is a bit much. If big banks can utilize a form of blockchain technology that revolutionizes finance, and if they are willing and able to pass these benefits onto their customers, then it is hardly an evil plot.
Vitalik Buterin said it best: “the idea that there is ‘one true way’ to be blockchaining is completely wrong headed, and both categories have their own advantages and disadvantages”. This is the purpose for addressing other possibilities as listed below;
Public Blockchain
A Blockchain was designed to securely cut out the middleman in any exchange of asset scenario. It does this by setting up a block of peer-to-peer transactions. Each transaction is verified and synced with every node affiliated with the blockchain before it is written to the system. Until this has occurred, the next transaction cannot move forward. Anyone with a computer and internet connection can set up as a node that is then synced with the entire blockchain history. While this redundancy makes public blockchain extremely secure, it also makes it slow and wasteful.
The electricity (power requirements) needed to run each transaction is astronomical and increases with every additional node. The benefit is every transaction is public and users can maintain anonymity. A public blockchain is most appropriate when a network needs to be decentralized. It is also great if full transparency of the ledger or individual anonymity are desired benefits. Costs are higher and speeds are slower than on a private chain, but still faster and less expensive than the accounting systems and methods used today.
This is a good trade-off for a cryptocurrency like Bitcoin. Security is key to their users, a decentralized network is at the heart of the project and their competitors in the finance industry are still significantly more expensive and slower than a public blockchain network despite its slowness when compared to a private blockchain.
Private Blockchain
Private blockchain lets the middleman back in, to a certain extent. It is similar to the statement “better the devil you know, than the devil you don't know. Here, the company writes and verifies each transaction. This allows for much greater efficiency and transactions on a private blockchain will be completed significantly faster. Though it does not offer the same decentralized security as its public counterpart, trusting a business to run a blockchain is no more dangerous than trusting it to run a company without blockchain. The company can also choose who has read access to their blockchain's transactions, allowing for greater privacy than a public blockchain.
A private blockchain is appropriate to more traditional business and governance models, but that isn't a bad thing. Just because it is unlikely to revolutionize our world, doesn't mean it can't play a role in making the world better. Competition is key to developing the most useful products. Traditional financial institutions have long held a monopoly—technically, an oligopoly—over the industry. Their outdated products and services are a direct result of this power. Using a privately run version of blockchain technology can bring these organization into the 21st century. A number of our governance institutions are old and outdated as well.
Like finance, our government is not subject to competition. Adoption and integration will likely be slower in this sector, but if and when blockchain technologies are adopted they will cut billions of dollars of behind the scenes spending.
Imagine a truly secure online voting system. No more poll workers, voting booths, paper ballots, paid counters or organizers with cushy salaries. What's more, the barriers to voting will be greatly reduced and we will likely see an increase in turnout.
This could be accomplished with a public design, but most governments are unlikely to decentralize control and security, so a vetted private system greatly increases the chance of adoption.
Consortium Blockchain
Consortium blockchain is partly private. There has been some confusion about how this differs from a fully private system. Here again, Vitalik Buterin provides a pretty straightforward definition:
“So far there has been little emphasis on the distinction between consortium blockchains and fully private blockchains, although it is important: the former provides a hybrid between the ‘low-trust’ provided by public blockchains and the ‘single highly-trusted entity’ model of private blockchains, whereas the latter can be more accurately described as a traditional centralized system with a degree of cryptographic auditability attached.”
Instead of allowing any person with an internet connection to participate in the verification of transactions process or allowing only one company to have full control, a few selected nodes are predetermined. A consortium platform provides many of the same benefits affiliated with private blockchain—efficiency and transaction privacy, for example—without consolidating power with only one company. One can think of it as trusting a council of elders. The council members are generally known entities and they can decide who has read access to the blockchain ledger. Consortium blockchain platforms have many of the same advantages of a private blockchain, but operate under the leadership of a group instead of a single entity. This platform would be great for organizational collaboration.
Imagine central banks coordinating their activities based on international rules of finance. Another scenario could include the United Nations outsourcing their transactional ledger and voting system to blockchain, allowing each country to represent a verifying node.
A major concern and major objective of the present disclosure involves the fact that many people, institutions and corporations have the belief that even the blockchain is not completely secure and perhaps even corruptible.
In recent months, Bitcoin's supporters have pointed to its falling use in illegal transactions as a sign of the cryptocurrency's growth toward mainstream acceptance. But German researchers say that links to child pornography within technology underlying Bitcoin could stifle its development. While the blockchain is largely known to be an immutable ledger of Bitcoin transactions corroborated by copies held by participating computers, it also allows its users to leave coded messages. Bitcoin's creator, Satoshi Nakamoto, famously left a cryptic message on the blockchain's original block: “The Times 3 Jan. 2009 Chancellor on brink of second bailout for banks.”
Like that very first message, most of the content left on the blockchain has been relatively benign—tributes to the late Nelson Mandela, or messages to loved ones on Valentine's Day. But the ones that could be illegal, containing links to child porn, for example, could be an outsized problem for the Bitcoin community.
“While most of this content is harmless, there is also content to be considered objectionable in many jurisdictions, e.g., the depiction of nudity of a young woman or hundreds of links to child pornography,” the paper authored by members of RWTH Aachen University and Goethe University read. “As a result, it could become illegal (or even already is today) to possess the blockchain, which is required to participate in Bitcoin.”
The study, from RWTH Aachen University, also states that other files on the blockchain may violate copyright and privacy laws Researchers stated they had found eight files with sexual content. And three of these contained content “objectionable for almost all jurisdictions”. Two of these between them listed more than 200 links to child sexual abuse imagery.” Garrick Hileman, a crypto-currency expert at Cambridge University, stated that the issue of illegal content had been “discussed and known about for awhile.” Pruning, or altering parts of the blockchain ledger, would allow users to rid their local copies of illegal content, he said, but was likely to be too technical for most Bitcoin users. “There are big barriers anytime you need to make modifications,” Mr. Hileman said But he also added that although maintaining a complete record of the blockchain was more secure than an altered copy, “many would argue that it's not that important”.
The researchers said they found 1,600 instances in which transactions on the blockchain included non-financial information, representing about 1.4% of transactions. Since the Bitcoin blockchain is immutable, those who download it are also unwittingly downloading links to child porn.
The Department of Justice did not respond to requests for comment from Fortune.
It's not the first time curious onlookers have found links to child pornography in Bitcoin's blockchain. Users first pointed out the links in 2013. Though this is perhaps the first time researchers have been able to quantify the volume of potentially illicit material hidden in the blockchain.
Additionally, since Bitcoin has buyers and traders all over the world, items in the blockchain also raise questions about legality in other nations. As the blockchain researchers note: “In China, the mere possession of state secrets can result in longtime prison sentences. Furthermore, China's definition of state secrets is vague and covers, e.g., activities for safeguarding state security. Such vague allegations with reference to state secrets have been applied to critical news in the past.”
The researchers pointed out that the blockchain includes online news articles concerning pro-democracy demonstrations in Hong Kong in 2014, demonstrations that were a point of irritation for Beijing.
In an effort to rebuke the possibility that blockchain may be less than secure and/or corruptible, a research paper published in July 2017 entitled “Data Insertion in Bitcoin's Blockchain” explores this topic in more detail and explains how the coinbase data “is arbitrary and can be up to 100 bytes in size”. This article states that only miners have the ability to insert data in this manner, and it's typically used to signal mining support for proposed protocol changes. There are five other ways in which data can be encoded on the bitcoin blockchain, and it is the OP RETURN option that is at the center of the child pornography story. The 2017 research paper explains that “this method is appropriate for inserting small amounts of data (or transaction metadata), but it is not suitable for large quantities of data.”
80 bytes is all that OP_RETURN can store, and what's more that information is subject to deletion. That's because bitcoin nodes are capable of pruning “provably unspendable” UTXOs for efficiency, which include OP_RETURN data. Anyone wishing to use the bitcoin blockchain to seek out child pornography would need to perform the following convoluted process:                1. Download the entire bitcoin blockchain and sift through 251 million transactions to find the 1.4% that contain some kind of arbitrary data encoded in them.        2. Ensure that the version of the blockchain you were using had been subject to no pruning that might have removed OP_RETURN data.        3. Extract any web links that might be concealed in the data using some sort of steganography.        4. Type the links into your browser until you eventually found a website that was still accessible.        
To assert that the bitcoin blockchain contains child pornography is disingenuous, and is no more meaningful than saying that the internet contains CP. You could live to 100 and never encounter CP on the web, because that's not how the web works. And that's not how the blockchain works either.
Asserting that there is child pornography on the blockchain would be like strolling through the U.S. Capitol Building, dropping a scrap of paper containing a deep web address, and then claiming that the American government is storing obscene content. As respected bitcoin commenter Nic Carter wrote: “Any journalist writing about arbitrary content injection into the Bitcoin blockchain should be extremely careful to detail to what extent that content exists, is extractable, viewable, etc. A text string which is a URL link to a [website displaying a thing] is not [the thing itself]. That is an extremely bad interpretation. Do not conflate the two. If you are willing to claim that “the blockchain contains X” you should be able to prove that you can extract X.”
Steganography and blockchain data insertion are fascinating topics that deserve scrutiny and further study. To assert that the blockchain contains child pornography is misleading to the point of falsehood. It's possible to encode a hidden link inside any database, including Facebook, Twitter, and Wikipedia.
In any case, the present disclosure provides software developers with a new and better way to secure whatever software they're building so when that software communicates with either a copy of itself or other types of software, including the software resident in various types of devices, the data is kept safe. This application is specific to the ability to further secure one or more blockchains, which are already secure but have been reportedly hacked as stated above.
The present disclosure also relates generally to a cryptographic management scheme that provides for network security, mobile security, and specifically and more particularly relates to devices (such as containers) and a system for creating and manipulating encryption keys without risking the security of the key. The present disclosure addresses all of the needs described directly herein, as well as described earlier above. In addition, U.S. Provisional Patent Application No. 62/540,352, field Aug. 2, 2017 entitled “Combined Hidden Dynamic Random Access Devices and Encryption System Utilizing Selectable Keys and Key Locators for Communicating Randomized Encrypted Data together with Sub-Channels and Executable Coded Encryption Keys” has been added as an Appendix B to this application. The basis of this application is detailed below and includes the ability to both utilize one or more blockchains to enhance the securitization system as well as utilize the system to provide additional securitization for one or more blockchains.
As it is known in cryptology, encryption techniques (codification) using standard and evolving computerized computations or algorithms are used so that data exposed to undesirable third parties are encrypted making it difficult (and intended to be impossible) for an unauthorized third party to see or use it. Usually, for encryption, the term ‘plaintext’ refers to a text which has not been coded or encrypted. In most cases the plaintext is usually directly readable, and the terms ‘cipher-text’ or ‘encrypted text’ are used to refer to text that has been coded or “encrypted”. Encryption experts also assert that, despite the name, “plaintext”, the word is also synonymous with textual data and binary data, both in data file and computer file form. The term “plaintext” also refers to serial data transferred, for example, from a communication system such as a satellite, telephone or electronic mail system. Terms such as ‘encryption’ and ‘enciphering’, ‘encrypted’ and ‘ciphered’, ‘encrypting device’ and ‘ciphering device’, ‘decrypting device’ and ‘decipher device’ have an equivalent meaning within cryptology and are herein used to describe devices and methods that include encryption and decryption techniques.
There is an increasing need for security in communications over public and private networks. The expanding popularity of the Internet, and especially the World Wide Web, have lured many more people and businesses into the realm of network communications. There has been a concomitant rapid growth in the transmission of confidential information over these networks. As a consequence, there is a critical need for improved approaches to ensuring the confidentiality of private information.
Network security is a burgeoning field. There are well known encryption algorithms, authentication techniques and integrity checking mechanisms which serve as the foundation for today's secure communications. For example, public key encryption techniques using RSA and Diffie-Hellman are widely used. Well known public key encryption techniques generally described in the following U.S. Pat. No. 4,200,770 entitled, Cryptographic Apparatus and Method, invented by Hellman, Diffie and Merkle; U.S. Pat. No. 4,218,582 entitled, Public Key Cryptographic Apparatus and Method, invented by Hellman and Merkle; U.S. Pat. No. 4,405,829 entitled Cryptographic Communications System and Method, invented by Rivest, Shamir and Adleman; and U.S. Pat. No. 4,424,414 entitled, Exponentiation Cryptographic Apparatus and Method, invented by Hellman and Pohlig. For a general discussion of network security, refer to Network and Internetwork Security, by William Stallings, Prentice Hall, Inc., 1995.
In spite of the great strides that have been made in network security, there still is a need for further improvement. For example, with the proliferation of heterogeneous network environments in which different host computers use different operating system platforms, there is an increasing need for a security mechanism that is platform independent. Moreover, with the increasing sophistication and variety of application programs that seek access to a wide range of information over networks, there is an increasing need for a security mechanism that can work with many different types of applications that request a wide variety of different types of information from a wide variety of different types of server applications. Furthermore, as security becomes more important and the volume of confidential network transactions expands, it becomes increasingly important to ensure that security can be achieved efficiently, with minimal time and effort.
The creation of proprietary digital information is arguably the most valuable intellectual asset developed, shared, and traded among individuals, businesses, institutions, and countries today. This information is mostly defined in electronic digital formats, e.g., alphanumeric, audio, video, photographic, scanned image, etc. It is well known that a large number of encryption schemes have been used for at least the last 100 years and deployed more frequently since the onset of World Wars I and II. Since the beginning of the cold war, the “cat and mouse” spy missions have further promulgated the need for secure encryption devices and associated systems.
Simultaneously, there has been an increased need for mobility of transmissions including data and signals by physical or logical transport between home and office, or from office to office(s) among designated recipients. The dramatic increase in the velocity of business transactions and the fusion of business, home, and travel environments has accelerated sharing of this proprietary commercial, government, and military digital information. To facilitate sharing and mobility, large amounts of valuable information may be stored on a variety of portable storage devices (e.g., memory cards, memory sticks, flash drives, optical and hard disc magnetic media) and moved among home and office PCs, portable laptops, PDAs and cell phones, and data and video players and recorders. The physical mobility of these storage devices makes them vulnerable to theft, capture, loss, and possible misuse. Indeed, the storage capacity of such portable storage devices is now approaching a terabyte, sufficient to capture an entire computer operating environment and associated data. This would permit copying a targeted computer on the storage media and replicating the entire data environment on an unauthorized “virgin” computer or host device.
Another trend in data mobility is to upload and download data on demand over a network, so that the most recent version of the data is always accessible and can be shared only with authorized users. This facilitates the use of “thin client” software and minimizes the cost of storing replicated versions of the data, facilitates the implementation of a common backup and long-term storage retention and/or purging plan, and may provide enhanced visibility and auditing as to who accessed the data and the time of access, as may be required for regulatory compliance. However, thin client software greatly increases the vulnerability of such data to hackers who are able to penetrate the firewalls and other mechanisms, unless the data is encrypted on the storage medium in such a way that only authorized users could make sense of it, even if an unauthorized user were able to access the encrypted files.
There is a balance among legal, economic, national security, and pragmatic motivations to develop robust security implementations and policies to protect the storage of proprietary digital information, based on the value of the information, the consequences of its exposure or theft, and the identification and trust associated with each of the targeted recipients. In order to provide such varying degrees of protection for portable storage devices, system methods and application functionality must be developed and easily integrated into the operating procedures of the relevant institutions. Different policies defining degrees of protection are required to economically accommodate and adapt to a wide range of targeted recipient audiences for this data.
Known encryption systems for these devices include the “Data Encryption Standard” (“DES”), which was initially standardized by the “American National Bureau of Standards”, currently “National Institute of Standards and Technology” (“NB S” or “NIST”) in the United States. Another includes the “Fast data encipherment algorithm FEAL” (FEAL) developed later in Japan, and described in the IECEJ Technical Report IT 86-33. U.S. Pat. No. 5,214,703 entitled “Device for the Conversion of a Digital Block and Use of Same” describes the use of additional devices as does an encryption device described in U.S. Pat. No. 5,675,653 entitled “Method and Apparatus for Digital Encryption”. In most cases, the user making use of protecting the data after encryption or enciphering of a plaintext has delegated the strength of the invulnerability of the encryption to be positioned in front of an enemy attack. This positioning is aimed to discover the contents of the cipher text or the encryption key used, trusting in the organizations, institutions, or experts endorsing their security and providing a degree of confusion and diffusion of values introduced by the encryption device used in the cipher text. The user encrypting a particular plaintext has no objective security regarding the degree of confusion and diffusion of values present in a cipher text that result from the application of the encryption device. Attacks on personal computers and commercial, government and military data are now commonplace; indeed, identity theft of passwords is the largest white-collar crime in the United States. Yet passwords and PINs (Personal Identification Numbers), in most cases generated by human beings who are tempted to use native-language words, Social Security Numbers, telephone numbers, etc., are still the most used access security methods for protecting portable encryption devices, and among the most vulnerable to both brute force dictionary attacks as well as sophisticated logic tracing. Professional criminal attackers and even amateur hackers now have access to sophisticated software and supercomputing networks that can unknowingly invade processing devices and storage devices, trace software instruction sequences and memory locations, and by knowing or discovering the algorithms being used, intercept and copy encryption keys, PINs, and other profile data used to protect the access to stored content. They can exploit vulnerabilities in the underlying commercial software, or in the construction of the integrated circuit chips housing and executing the cryptographic processes, or in the specialized cryptographic software, which enables exposing keys and access parameters at some deterministic point in the processing sequence. Industrial laboratory facilities are also available to read the data content stored in memory cells by measuring the electronic charge through the use of electronic beam microscopes, and thus steal stored PINs, keys, and therefore access the previously protected data.
Many prior art methods exist for the key management protection necessary for securing key encryption keys for large groups of users. Split-key secret sharing schemes have been proposed whereby the decryption key is split and shared among multiple parties or entities to be combined to reconstitute the decryption key. In these cases, however, the individual secret shares themselves are maintained statically in multiple storage devices, generally on-line, where they are susceptible to attackers, particularly from within the institution, who can target the secret shares and recombine then to form the decryption key. Such solutions are often implemented for relatively static configurations of computing and storage devices and related communities of interest or tiers of users, and have not addressed the ability to so protect key encrypting keys when the data itself, and the means to encrypt and decrypt the data and to generate and recombine the shared secrets, are on a portable device.
Current file encryption systems provide a technique for a general-purpose computer to encrypt or decrypt computer-based files. Current encryption and decryption techniques typically rely on lengthy strings (e.g., 1024 bits, 2048 bits, 4096 bits, or more) to provide for secure encryption or decryption of files. Computer performance suffers due to the amount of data in the messages as well as the size of the encryption keys themselves.
Asymmetric file encryption systems use a different key to encrypt a file from the key used to decrypt the encrypted file. Many current file encryption systems rely on asymmetric encryption, such as those that rely on public key/private key pairs. An example of an encryption algorithm that utilizes public key/private key pairs is the RSA (Rivest, Shamir, and Adleman) algorithm. Symmetric file systems use an identical key to encrypt a file as the key used to decrypt the encrypted file. Certain file encryption systems utilize a cryptographic process or random number generator to derive a random symmetric key known as the file encryption key (FEK). The FEK is used to encrypt the file. Symmetric cryptography functions up to five orders of magnitude faster than asymmetric cryptography on files. Even with a very fast key device or software that encrypts/decrypts using the asymmetric key, any such file encryption system still has to overcome the fact that asymmetric keys generally operate at orders of magnitude slower than symmetric keys. When using the file encryption key, each time a file is being authenticated, the file encryption key has to be decrypted by the asymmetric key which is time consuming, but becoming less so as computer speeds and operations are constantly improving.
What is needed are highly robust and proven security techniques incorporated into new system methods and into new commercially available portable storage hardware apparatus to implement configurable security policies for accessing information through rigorous authentication means, to secure the information with certified levels of accepted cryptographic technology, and to rigorously control the environment within which the information is shared.
In addition, there is a need to better secure portable storage apparatus and method of encrypting and sealing digital information files and storing them in the device's integral or removable memory, or alternatively on the host device's memory or other ancillary memory storage devices, while operating under cryptographically protected security policies for transport and authorized access to such digital information.
There is also a need for secure physical and logical transport of data to and from multiple recipients. To this end, it is desirable to provide a means of securely transporting data from one place to another, if the user has to carry the data or physically transport the data and the secure encryption device, and somehow communicate the information necessary to log on and access the data by another authorized user. What is required are a multiplicity of methods to securely transport the encrypted data, either physically or logically, between an Originator user and one or more Receivers.
The use of encryption devices by the general population is becoming very common in for example, commercial electronic transactions and/or electronic mail. A predominant portion of all societies want to believe in an objective, easily verified way, that the maximum degree of the diffusion and confusion (encryption) of data and data values provided by a system they are using to encrypt their data, is the superior set of encrypted devices and system.
The present disclosure also relates generally to a cryptographic management scheme that provides for network security, mobile security and specifically and more particularly relates to devices and a system for creating and manipulating encryption keys without risking the security of the key while enhancing the security of the blockchain as well as utilizing the blockchain to enhance the security of the cryptographic management scheme. The present disclosure addresses all of the needs described directly herein, as well as described earlier above.